[Federal Register: May 17, 2006 (Volume 71, Number 95)]
[Notices]
[Page 28684-28692]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17my06-52]
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DEPARTMENT OF ENERGY
Western Area Power Administration
Loveland Area Projects--Western Area Colorado Missouri Balancing
Authority-Rate Order No. WAPA-118
AGENCY: Western Area Power Administration, DOE.
ACTION: Notice of rate order.
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SUMMARY: The Deputy Secretary of Energy confirmed and approved Rate
Order No. WAPA-118 and Rate Schedule L-AS3, placing the rate for
Regulation and Frequency Response Service (Regulation Service) for the
Loveland Area Projects (LAP)--Western Area Colorado Missouri Balancing
Authority (Balancing Authority) of the Western Area Power
Administration (Western) into effect on an interim basis. This
provisional rate will be in effect until the Federal Energy Regulatory
Commission (Commission) confirms, approves, and places it into effect
on a final basis or until it is replaced by another rate. The
provisional rate will provide sufficient revenue to pay all annual
costs, including interest expense, and repay power investment, within
the allowable periods.
DATES: Rate Schedule L-AS3 will be placed into effect on an interim
basis on the first day of the first full billing period beginning on or
after June 1, 2006, and will be in effect until the Commission
confirms, approves, and places the rate schedule in effect on a final
basis through May 31, 2011, or until the rate schedule is superseded.
FOR FURTHER INFORMATION CONTACT: Mr. Edward F. Hulls, Operations
Manager, Rocky Mountain Customer Service Region, Western Area Power
Administration, P.O. Box 3700, Loveland, CO 80539-3003, (970) 461-7566,
e-mail hulls@wapa.gov, or Mr. Daniel Payton, Rates Manager, Rocky
Mountain Customer Service Region, Western Area Power Administration,
P.O. Box 3700, Loveland, CO 80539-3003, (970) 461-7442, e-mail
dpayton@wapa.gov.
SUPPLEMENTARY INFORMATION: The Deputy Secretary of Energy approved
existing Rate Schedule L-AS3 for Regulation Service, as part of Rate
Order No. WAPA-106 (69 FR 1723) on December 30, 2003, placing those
formula rates into effect on an interim basis effective March 1, 2004.
The Commission confirmed and approved the rate schedules on January 31,
2005, under FERC Docket No. EF04-5182-000 (110 FERC 62,084) for service
through February 28, 2009.
This provisional rate is to supersede the current Rate Schedule L-
AS3 only. Under the existing Rate Schedule L-AS3, the cost for
Regulation Service is only applied against entities' auxiliary loads.
The revised rate remains unchanged for the most part; however,
provisions have been made for the application of the load-based rate to
all intermittent resources within the Balancing Authority. Intermittent
generators serving load outside the Balancing Authority will also pay a
pass-through cost for Regulating Reserves. Additionally, Western has
further defined the measurement for self-provision of Regulation
Service. Although self-provision was permitted under the previously
approved rate schedule, the terms and conditions have now been
specifically defined.
Since June 2003 Western representatives have attended and
participated in various technical conferences and workshops with
parties interested in the development of this revised rate for
Regulation Service, including the Utility Wind Interest Group, Oak
Ridge National Laboratory, the National Wind Coordinating Committee,
the National Renewable Energy Laboratory, Public Service Company of New
Mexico, the Rocky Mountain Electrical League, and the Commission.
By Delegation Order No. 00-037.00, effective December 6, 2001, the
Secretary of Energy delegated: (1) The authority to develop power and
transmission rates to Western's Administrator, (2) the authority to
confirm, approve, and place such rates into effect on an interim basis
to the Deputy Secretary of Energy, and (3) the authority to confirm,
approve, and place into effect on a final basis, to remand or to
disapprove such rates to the Commission. Existing DOE procedures for
public participation in power rate adjustments (10 CFR part 903) were
published on September 18, 1985.
Under Delegation Order Nos. 00-037.00 and 00-001.00B, and pursuant
to 10 CFR part 903 and 18 CFR part 300, I hereby confirm, approve, and
place Rate Order No. WAPA-118, the proposed Regulation and Frequency
Response Service rate, into effect on an interim basis. The new Rate
Schedule L-AS3 will be promptly submitted to the Commission for
confirmation and approval on a final basis.
Dated: May 9, 2006.
Clay Sell,
Deputy Secretary.
Deputy Secretary; Order Confirming, Approving, and Placing the Loveland
Area Projects--Western Area Colorado Missouri Balancing Authority
Regulation and Frequency Response Service Rate Into Effect on an
Interim Basis
This rate was established in accordance with section 302 of the
Department of Energy (DOE) Organization Act (42 U.S.C. 7152). This Act
transferred to and vested in the Secretary of Energy the power
marketing functions of the Secretary of the Department of the Interior
and the Bureau of Reclamation under the Reclamation Act of 1902 (ch.
1093, 32 Stat. 388), as amended and supplemented by subsequent laws,
particularly section 9(c) of the Reclamation Project Act of 1939 (43
U.S.C. 485h(c)), and other Acts that specifically apply to the project
involved.
By Delegation Order No. 00-037.00, effective December 6, 2001, the
Secretary of Energy delegated: (1) The authority to develop power and
transmission rates to Western's Administrator, (2) the authority to
confirm, approve, and place such rates into effect on an interim basis
to the Deputy Secretary of Energy, and (3) the authority to confirm,
approve, and place into effect on a final basis, to remand or to
disapprove such rates to the Commission. Existing DOE procedures for
public participation in power rate adjustments (10 CFR part 903) were
published on September 18, 1985.
Acronyms and Definitions
As used in this Rate Order, the following acronyms and definitions
apply:
ACE: Area Control Error. The instantaneous difference between a
Balancing Authority's net actual and scheduled interchange, taking into
account the effects of Frequency Bias and correction for meter error
and automatic time-error correction.
AGC: Automatic Generator Control. Equipment that automatically
adjusts generation in a Balancing Authority from a central location, to
maintain the Balancing Authority's interchange schedule plus Frequency
Bias. AGC may also accommodate automatic inadvertent payback and time-
error correction.
Auxiliary Load: An entity's metered load, less its Federal
allocation.
Balancing Authority: The responsible entity that integrates
resource plans
[[Page 28685]]
ahead of time, maintains load-interchange-generation balance within a
Balancing Authority area, and supports interconnection frequency in
real time.
Capacity: The electric capability of a generator, transformer,
transmission circuit or other equipment. It is expressed in kW.
Capacity Rate: The rate which sets forth the charges for capacity.
It is expressed in dollars per kilowatt-month.
Commission: Federal Energy Regulatory Commission.
CPS2: NERC's Control Performance Standard 2 which requires that the
average ACE for at least 90 percent of clock 10-minute periods (6 non-
overlapping periods per hour) during a calendar month must be within a
specific limit, referred to as L10 or ``L sub 10''.
CRSP: Colorado River Storage Project.
FERC: The Commission (to be used when referencing Federal Energy
Regulatory Commission Orders).
FERC Order No. 888: FERC's order promoting open access
transmission.
Frequency Bias: A value, usually expressed in megawatts per 0.1
Hertz (MW/0.1 Hz) associated with a Balancing Authority that
approximates the Balancing Authority's response to interconnection
frequency error.
Fry-Ark: Fryingpan-Arkansas Project.
Intermittent Resource: For purposes of this rate order, an electric
generator that is not dispatchable and cannot store its fuel source and
therefore, cannot respond to changes in system demand or respond to
transmission security constraints.
kW: Kilowatt; a unit of power equal to 1,000 watts.
LAP: Loveland Area Projects.
MW: Megawatt; a unit of power equal to 1,000 kilowatts.
NERC: North American Electric Reliability Council.
P-SMBP: Pick-Sloan Missouri Basin Program.
Provisional Rate: A rate which has been confirmed, approved and
placed into effect on an interim basis by the Deputy Secretary.
Reclamation Law: A series of Federal laws. Viewed as a whole, these
laws create the originating framework under which Western markets
power.
Regulating Reserve: An amount of reserve responsive to automatic
generation control, which is sufficient to provide normal regulating
margin.
Regulating Reserve Charge: Component of the provisional rate that
would charge for the consumption of Regulating Reserves.
Regulation Service: Regulation and Frequency Response Service--An
ancillary service necessary to provide for the continuous balancing of
resources, generation, and interchange, with load to maintain scheduled
interconnection frequency at 60 cycles per second (60 Hz).
Regulation Service is accomplished by committing on-line generation
through the use of automatic generating control equipment to follow
moment-by-moment changes in load.
SBA: Sub-Balancing Authority--An entity serving load inside the
Balancing Authority, with sufficient metering and AGC to accommodate
minute-to-minute changes between its metered load and generation.
Tariff: Western's Open Access Transmission Tariff.
WACM: Western Area Colorado Missouri Balancing Authority, formerly
known as the Western Area Colorado Missouri Control Area.
WALC: Western Area Lower Colorado Balancing Authority.
WECC: Western Electricity Coordinating Council.
Western: United States Department of Energy, Western Area Power
Administration.
Effective Date
The provisional rate will take effect on the first day of the first
full billing period beginning on or after June 1, 2006, and will remain
in effect until May 31, 2011, pending approval by the Commission on a
final basis.
Public Notice and Comment
Western followed the Procedures for Public Participation in Power
and Transmission Rate Adjustments and Extensions, 10 CFR part 903, in
developing these rates. Western involved interested parties in the rate
process in the following manner:
1. Western proposed a rate adjustment for Regulation Service under
Rate Order No. WAPA-106, dated June 13, 2003, and subsequently withdrew
it on January 12, 2004, to allow more time for public input on
intermittent resources and the self-provision of Regulation Service.
2. On March 18, 2004, Western hosted a Technical Information
Meeting on Regulation Service in Denver, Colorado. At this meeting,
Western presented its findings regarding the withdrawal of the proposed
rate. Interested parties gave detailed presentations from their
respective viewpoints about Regulation Service.
3. Between May 2004 and May 2005, Western representatives met with
officials from Platte River Power Authority, the National Renewable
Energy Laboratory, Oak Ridge National Laboratory, and the Center for
Resource Solutions to solicit input on and discuss the impacts of the
proposed Regulation Service rate.
4. On September 27, 2004, Western held a second Technical
Information Meeting on Regulation Service in Denver, Colorado, to
discuss the results of the technical work completed since the March 18,
2004, Technical Information Meeting.
5. On June 20, 2005, Western published a Notice of Proposed Rate
for Regulation Service in the Federal Register (70 FR 35424).
Publication of this notice began the formal public process.
6. On July 27, 2005, Western held public information and public
comment forums for the proposed Regulation Service rate adjustment in
Denver, Colorado.
7. The Consultation and Comment Period for the public process
closed on September 19, 2005.
8. Western received two comment letters during the Consultation and
Comment Period which were considered in preparing this rate order. One
comment letter received on September 27, 2005, while not specifically
addressed in this rate order, reiterated the comments of the other two
commenters, and therefore, was addressed.
Comments
Written comments were received from the following: Oak Ridge
National Laboratory, Oak Ridge, Tennessee, and the National Renewable
Energy Laboratory, Golden, Colorado (submitted jointly) Colorado
Springs Utilities, Colorado Springs, Colorado.
Representatives of the following organizations made oral comments:
Oak Ridge National Laboratory, Oak Ridge, Tennessee Colorado Springs
Utilities, Colorado Springs, Colorado Platte River Power Authority,
Fort Collins, Colorado.
Project Description
A. Federal Projects Providing Regulation Service
LAP is comprised of two power projects that provide Regulation
Service for the WACM Balancing Authority, the Pick-Sloan Missouri Basin
Program--Western Division (P-SMBP-WD) and the Fryingpan-Arkansas
Project (Fry-Ark). The two projects were operationally and financially
integrated for marketing purposes in 1989.
WACM also receives supplemental Regulation Service through a
dynamic signal from CRSP generating resources located within the WALC
Balancing Authority.
Within WACM, LAP provides service to customers in a three-state
area
[[Page 28686]]
(Colorado, Wyoming, and Nebraska) over a transmission system of
approximately 3,356 miles (5,401 circuit kilometers), and CRSP provides
service to customers over a transmission system of approximately 1,422
miles (2,288 circuit kilometers).
Loveland Area Projects
Pick-Sloan Missouri Basin Program--Western Division
The initial stages of the Missouri River Basin Project, under
construction since 1944, were authorized by section 9 of the Flood
Control Act of December 22, 1944 (58 Stat. 877, Public Law 534, 78th
Congress, 2nd session). It was later renamed the Pick-Sloan Missouri
Basin Program (P-SMBP) to honor its two principal authors. The P-SMBP
encompasses a comprehensive program, with the following authorized
functions: flood control, navigation improvement, irrigation, municipal
and industrial water development, and hydroelectric production for the
entire Missouri River Basin. Multipurpose projects have been developed
on the Missouri River and its tributaries in Colorado, Montana,
Nebraska, North Dakota, South Dakota, and Wyoming.
The Colorado-Big Thompson (C-BT), Kendrick, Riverton, and Shoshone
Projects were administratively combined with P-SMBP in 1954, followed
by the North Platte Project in 1959. These projects are known as the
``Integrated Projects'' of the P-SMBP. The Riverton Project was
reauthorized as a unit of the P-SMBP in 1970.
The P-SMBP-WD and the Integrated Projects consist of 19
powerplants: 6 in the C-BT, 6 in the P-SMBP-WD, 2 in the Kendrick
Project, 4 in the Shoshone Project, and 1 in the North Platte Project.
Fryingpan-Arkansas Project
Fry-Ark is a transmountain diversion project in central and
southeastern Colorado authorized by the Act of August 16, 1962 (Pub. L.
87-590, 76 Stat. 399, as amended by Title XI of the Act of October 27,
1974, Pub. L. 93-493, 88 Stat. 1487). The Fryingpan and Roaring Fork
rivers are part of the Colorado River Basin, on the West Slope of the
Rocky Mountains. Fry-Ark diverts water from the Fryingpan River and
other tributaries of the Roaring Fork River to the Arkansas River on
the East Slope of the Rocky Mountains. The water diverted from the West
Slope, together with regulated Arkansas River water, provides
supplemental irrigation, municipal and industrial water supplies, and
hydroelectric power production. Flood control, fish and wildlife
enhancement, and recreation are other important purposes of Fry-Ark.
Fry-Ark features five dams and reservoirs, one located on the West
Slope of the Rocky Mountains, and four located on the East Slope of the
Rocky Mountains.
Fry-Ark's electrical features consist of the Mount Elbert 206-MW
Pumped-Storage Power Plant, the Mount Elbert Switchyard, and the Mount
Elbert-Malta 230-kV Transmission Line.
Colorado River Storage Project
CRSP was authorized by the Act of April 11, 1956. It consists of
four major storage units: Glen Canyon on the Colorado River in Arizona
near the Utah border, Flaming Gorge on the Green River in Utah near the
Wyoming border, Navajo on the San Juan River in northwestern New Mexico
near the Colorado border, and the Wayne N. Aspinall unit (formerly
known as Curecanti) on the Gunnison River in west-central Colorado.
Six Federal powerplants with 16 units are associated with the
project. The operating capacity of CRSP's 16 generating units was
approximately 1,727,000 kW in fiscal year (FY) 2005. CRSP operates its
transmission system within two balancing authorities, WACM and WALC.
B. Balancing Authority Characteristics
WACM is operated by Western and has Federal hydroelectric resources
from the P-SMBP--WD and Fry-Ark Project. Large non-Federal thermal
generators also operate within WACM, but are not under the direct
control of Western; e.g., Laramie River Station operated by Basin
Electric Power Cooperative, Inc., and Craig Power Plant operated by
Tri-State Generation and Transmission Association, Inc.
The thermal generation within WACM represents the larger portion of
the Balancing Authority's resource portfolio. However, thermal
resources are much slower to respond to Regulation Service
requirements, are generally operated near or at maximum generating
capacity, and are typically not part of the AGC configuration.
Generally, the thermal generation within WACM, as configured, is not
considered capable of providing significant Regulation Service.
In FY 2005, the peak load within WACM was measured at about 3,300
MW with approximately 5,300 MW of generation installed. Federal
generation capacity is 830 MW or about 15 percent of the total
available resource.
Balancing Authority Regulating Constraints
The only units within WACM capable of providing Regulation Service
are those with the ability to adjust their output on a moment-to-moment
basis. These units are located at Yellowtail, Seminoe, Kortes, Fremont
Canyon, Alcova, Estes, Flatiron, and Mount Elbert powerplants. The
amount of Regulating Reserve available from LAP powerplants is limited
by how many units are available and the prescheduled loading of the
units at a given time. Factors influencing unit regulating availability
include water schedules, individual generator rough zone constraints,
and various environmental constraints. These limitations exist at most
LAP powerplants including Yellowtail and Mount Elbert, the two primary
powerplants providing Regulation Service.
The relatively small size of some forebays and afterbays also
limits the amount of Regulating Reserve available to the system.
Additionally, water delivery has priority over generation needs,
further restricting the amount of water that can be moved through the
generators to provide Regulation Service.
C. Regulation Service Rate Discussion
In April 1998 Western implemented a load-based rate for Regulation
Service. This rate has been applied to auxiliary loads within the
Balancing Authority since that time. The existing formula rate for
Regulation Service is based on an analysis that shows WACM requires 75
MW of Regulating Reserve. As LAP has limited hydroelectric generation
available for Regulation Service, it must rely on purchases from others
to supplement its own resources. This is important as the Balancing
Authority could be the default provider of Regulation Service for 653.5
MW of intermittent resources currently in its interconnection queue.
Recognizing its resource limitations, in this rate adjustment Western
has included rates designed to properly allocate costs to all users of
Regulation Service, including intermittent resources.
The rate for Regulation Service is derived by dividing the revenue
requirement by the load plus the installed intermittent generation, if
any, within the WACM Balancing Authority requiring Regulation Service.
The revenue requirement for Regulation Service consists of: (1) The
annualized cost of LAP powerplants providing Regulation Service within
the WACM Balancing Authority, (2) the revenue requirement for CRSP
powerplants
[[Page 28687]]
providing supplemental Regulation Service to the WACM Balancing
Authority, and (3) the cost of purchases to support Regulation Service.
The load taking Regulation Service within WACM is derived by
measurement of the load coincident with the LAP transmission system
peak on a rolling 12-month average, plus the nameplate capacity of the
intermittent resources located within the Balancing Authority.
The provisional Regulation Service rate was developed based on the
analysis of data relevant to the WACM Balancing Authority, and an
extensive record was compiled during the process. Each Balancing
Authority has unique operating characteristics and constraints when
providing ancillary services. This rate is specifically designed for
WACM's unique operating characteristics.
Basis for Rate Development
The existing rate for Regulation Service in Rate Schedule L-AS3
expires on February 28, 2009.
The provisional rate will provide sufficient revenue to pay all
annual costs, including interest expense and repayment of power
investment, and will ensure that revenues are collected from the
appropriate entities. The provisional rate will take effect on June 1,
2006, and will remain in effect through May 31, 2011.
D. Rate Adjustment Background/Rates History
Background
Western published a Notice of Proposed Rate for Regulation Service
in the Federal Register on June 13, 2003 (68 FR 35398). One component
of that proposed rate specifically addressed Regulation Service needs
for intermittent resources. However, that component was withdrawn from
the Final Notice of Rate Order published in the Federal Register on
January 12, 2004 (69 FR 1723), to allow further study and input from
interested parties. This provisional rate for Regulation Service is the
culmination of that continued study and input from various interested
parties.
Existing, Proposed, and Provisional Rates
Western received comments during the Consultation and Comment
Period that ended September 19, 2005. Based on comments received and
further analysis, Western has revised its June 20, 2005, proposed rate
to reflect the final provisional rate outlined in this rate order.
Description of Existing Rate
Western's existing rate for Regulation Service is a load-based rate
which is applied to entities' auxiliary loads within WACM. The existing
rate provides for entities to be credited when providing WACM with
Regulation Service, and waives charges if the load/resource is
dynamically metered out of WACM. Western's existing rate contains no
provision for application of pass-through costs. Following is a
description of the changes made from the proposed rate to the
provisional rate:
Load-Based Assessment Changes
The June 2005 proposed rate maintained the existing rate's load-
based rate for application to auxiliary loads, but limited the
application of that load-based rate for intermittent resources equal to
or less than 10 percent of an entity's auxiliary load. The proposed
rate also provided for an assessment to any load or resource deemed to
be non-conforming.
The provisional rate eliminates the 10-percent limit, and applies
the load-based rate to both the auxiliary loads and the total installed
intermittent resources within the Balancing Authority.
Changes in the Pass-Through Assessment
The June 2005 proposed rate included provisions for periodic
evaluations of all generators' performance within the Balancing
Authority, and for those identified as non-conforming, provided for a
pass-through cost. In the proposed rate, pass-through costs would also
be applied to entities' intermittent resources exceeding 10 percent of
their auxiliary load.
The provisional rate eliminates the generator performance
evaluation, as well as the 10-percent measurement and the non-
conforming load/resource analysis. In the provisional rate, only
intermittent resources that are exported are charged a pass-through
cost for Regulating Reserves.
Changes in Self-Provision or Cost Waiver Assessment
The June 2005 proposed rate maintained the cost waiver if a load or
resource was dynamically metered out of the Balancing Authority. If an
entity claimed to be self-providing Regulation Service, the proposed
rate gave the option of fully or partially self-providing (no different
than the existing rate). The measurement of partial self-provision
would be accomplished by measuring the first derivative of the average
1-minute change in the entity's ACE. An entity claiming to fully self-
provide Regulation Service would have a choice of responding to WACM's
dynamic ACE proportional to the entity's load, allowing WACM direct
access to pulse the entity's regulating units, or some other mutually
agreed-to process.
The provisional rate no longer provides the option for an entity to
respond to a proportional share of WACM's ACE. The provisional rate
retains the option for an entity to allow WACM to directly pulse the
entity's regulating units. It has also been adjusted slightly to
measure partial self-provision by offering the customer the option of
measuring either the entity's first derivative of the average 1-minute
change in its ACE, or its averaged 1-minute ACE.
Summary of the Provisional Rate Effective June 1, 2006
The provisional rate maintains the load-based assessment for
auxiliary loads and the allowance for self-provision of the service,
but allows the following choices for measuring that self-provision: (1)
The first derivative of the averaged 1-minute change in the entity's
ACE, or (2) the entity's average 1-minute ACE.
The provisional rate eliminates the 10-percent limitation for
intermittent resources to receive the load-based rate and instead
applies the load-based rate to the total installed capacity of the
intermittent resource.
The provisional rate also eliminates the conforming versus non-
conforming load/resource analysis. However, any intermittent resource
exporting from WACM via a schedule would still be charged a pass-
through cost based on the average hourly mismatch between forecast and
actual generation.
Existing and Provisional Rates
A comparison of the existing, proposed, and provisional rates is as
follows:
------------------------------------------------------------------------
Existing Rate Schedule L-AS3 Proposed Rate Provisional Rate
Effective March 1, 2004 Schedule L-AS3 Schedule L-AS3
----------------------------- Proposed June 20, Effective June 1,
2005 2006
Load-Based Rate -------------------------------------------
Load-Based Rate Load-Based Rate
------------------------------------------------------------------------
Applied to: Applied to: Applied to:
[[Page 28688]]
(1) Entity's auxiliary loads (1) Entity's (1) Entity's
auxiliary loads;. auxiliary loads;
and
(2) Entities' (2) Entities' total
intermittent installed
resources < = 10% of inermittent
their auxiliary resources' capacity
load within WACM, within WACM, with
after 180 MW limit no installation
for intermittent limit.
resource
installation
reached; and
(3) Non-conforming (3) Eliminated.
type load (charged
an adjusted load-
based rate).
------------------------------------------------------------------------
Pass-Through Cost: Market- Pass-Through Cost: Pass-Through Cost:
Based Market-Based Market-Based
------------------------------------------------------------------------
N/A......................... Applied to:......... Applies to:
(1) all generators (1) See No. (2), in
without designated Cost Waiver section
load in WACM; and. below.
(2) entities with (2) No limit on
installed installed
intermittent intermittent
generation 10% of generation, which
their auxiliary will be charged as
load within WACM, outlined in a. and
after 180 MW limit b., below:
for intermittent
resource
installation
reached, will be
charged as follows:
(a) Regulation (a) Regulation
Charge for minute- Charge (load-based)
to-minute will be charged to
fluctuations. total installed
intermittent
resources (see Load-
Based Rate, No.
(2).
(b) Regulating (b) intermittent
Reserve Charge for resources exporting
hourly mismatch of from WACM via
capacity. schedule will be
charged for a
Regulating Reserve
Charge based on the
hourly mismatch of
forecast versus
actual generation.
------------------------------------------------------------------------
Cost Waiver: Cost Waiver: Cost Waiver:
------------------------------------------------------------------------
Cost for service partially Cost for service Cost for service
or fully waived if:. partially or fully partially or fully
waived if:. waived if:
(1) generator or load (1) generator or (1) generator or
dynamically metered out of load dynamically load dynamically
WACM; or metered out of metered out of
WACM; or. WACM; or
(2) an entity provides its (2) entities with (2) entities
own service (partially or manual AGC that are partially self-
fully) and claim is partially self- providing (charged
accepted by WACM providing (charged the load-based
load-based rate), rate) will be
will be measured by measured by either:
the first (a) first derivative
derivative of the of the averaged 1-
averaged 1-minute minute change in
change in the the entity's ACE;
entity's error or
signal; or (b) the entity's
average 1-minute
ACE; or
(3) entities with (3) entitites
automatic AGC, that wishing to fully
want to fully provide service
provide service (no must:
charge) must:
(a) be willing/able (a) no longer
to respond to applicable;
WACM's dynamic
signal,
proportional to
entity's load;
(b) allow WACM (b) allow WACM
direct access to direct access to
pulse entity's pulse entity's
regulating units; regulating units;
(c) mutually agree (c) mutually agree
to any other proven to any other proven
methodology or methodology or
process; or process; or
(d) if entity does (d) if entity doe
not comply with not comply with b.
(a), (b), or (c), or c., it will be
it will be subject subject to
to measurement measurement
outlined in manual outlined in this
AGC description in section, Nos.
No. (2), in this (2)(a) or (2)(b).
section.
------------------------------------------------------------------------
Customer Accommodation
As referenced in Western's existing rate schedule for Regulation
Service, entities requiring service ``* * * must either purchase this
service from WACM or make alternative comparable arrangements to
satisfy their Regulation obligations.'' (69 FR 1734) Western expects
that entities requiring Regulation Service will take service from the
WACM Balancing Authority.
However, for entities unwilling to take Regulation Service from the
WACM Balancing Authority, self-provide it, or acquire it from a third
party, Western has an established record of assisting and will continue
to assist entities in the dynamic metering of their loads or resources
out of the Balancing Authority. Until such time as meter
reconfiguration is accomplished, an entity will be responsible for
Regulation Service charges assessed by the WACM Balancing Authority
under the rate then in effect.
Certification of Rates
Western's Administrator certified that the provisional rate for
Regulation Service is the lowest possible rate consistent with sound
business principles. The provisional rate was developed following
administrative policies and applicable laws.
Comments
The comments and responses regarding the Regulation Service rate,
paraphrased for brevity when not affecting the meaning of the
statement(s), are discussed below. Direct quotes from comment letters
are used for clarification where necessary.
The issues discussed have been organized into three sections: (1)
Rate Design, (2) Implementation, and (3) Miscellaneous.
[[Page 28689]]
1. Rate Design
A. Comment: Several comments expressed concern about the difference
between Western's interpretation and their own regarding the true
nature of Regulation Service. The commenters stated that Western's
methodology for Regulation Service increases the cost of the service as
expensive regulating units also support load-following and ramping.
Response: The Commission requires balancing authorities to offer
transmission customers Regulation and Frequency Response Service.
However, there is no standard definition for load-following in any
Commission document, NERC's glossary of terms, or WECC's reliability
criteria. Within WACM, there is no distinction between Regulation
Service and load-following during the hour on a real-time basis.
WACM's Regulation Service, ramping, and load-following are
performed simultaneously by the same units. As typical loads require
all three services, it serves no purpose to operationally separate the
functions.
Out of the 16 customers taking Regulation Service from Western, the
7 balancing authorities adjacent to Western, or the 34 balancing
authorities within the Western Interconnection, none have made requests
or submitted comments to Western regarding the separation of these
services.
B. Comment: A comment suggested Western develop a mechanism to tap
into the ramping capability of non-Federal thermal generation within
WACM, so that the cost of Regulation Service and load-following could
be reduced for all customers.
Response: This comment is out of the scope of this rate action.
However, the ramping capability identified in the comment is not owned
by Western. Such resources are fully committed or used for the
respective owners' deliveries to load. Any use of available ramping
capability would have to be purchased from the thermal generation's
owner and replaced to accommodate previous operational commitments.
C. Comment: A comment states that the proposed rate methodology
adds unneeded complexity to the rate.
Response: Western believes that the methodology adopted in the
provisional rate reflects a more accurate assignment of costs and is a
reasonable modification of the existing approved rate for Regulation
Service. The methodology is no more complex than necessary to assign
costs fairly and provide adequate customer choice.
D. Comment: The rate adjustment fails to assess the actual physical
Regulation Service burden placed on the system by each separate
customer and improperly recovers costs from each customer in proportion
only to the Regulation Service burden placed on the system by each
customer group.
Response: This methodology is unchanged from the previous
Commission-approved rate and is consistent with regional and Western
Interconnection practices. A separate rate or system burden is not
identified for each customer, and proportional, cost-based assessments
will continue to be made for each customer's load share of the system's
Regulation Service requirements.
E. Comment: A commenter believes that the Regulation Service rate
should be based on the Regulation Service allocation method described
in the January 2000 report, ``Customer-Specific Metrics for the
Regulation and Load Following Ancillary Services,'' authored by Brendan
Kirby and Eric Hirst of Oak Ridge National Laboratory.
Response: Based upon Western's research, the methodology outlined
in the January 2000 report referenced by the comment has not been
adopted and put into practice by any entity or Balancing Authority in
the electric utility industry.
Western's load-based rate is approved by the Commission and has
been in effect for approximately 8 years. Western believes that minor
adjustments to the approved rate, based on operating experience and
Balancing Authority needs, are a reasonable modification.
The provisional rate methodology, specifically tailored for WACM's
unique mix of resources, results in the lowest cost consistent with
sound business principles and therefore, is most appropriate for
determining Regulation Service. A complete change in methodology is
unnecessary.
F. Comment: Western received several comments related to the
analysis of wind resources, their operating characteristics, and
impacts on Balancing Authority performance. Specifically, comments
addressed Western's simulation studies to determine wind impacts on the
Balancing Authority, the true amount of wind capacity that could be
absorbed by WACM, and the cost of service for intermittent resources.
Response: In its simulation studies on Balancing Authority
performance, Western projected or scaled the output of existing WACM
wind resources to study the impacts of additional wind resources.
While linear scaling of a large magnitude in the range of 10 to 20
times might render questionable results, Western has demonstrated that
linear scaling of 2 to 3 times is accurate for the purpose of this
analysis.
As a benchmark of reasonability, Western worked with a neighboring
Balancing Authority with similar characteristics and a 204-MW wind
farm. Analyses revealed that this wind farm had significant intra-hour
fluctuations, often up to the installed capacity of the units. During
these times, the neighboring Balancing Authority saw a significant
degradation in its operating performance.
Despite the fluctuations in output from wind or other intermittent
resources, Western has determined by reviewing additional information
and public comments that at present, there is no need to establish a
limit for the amount of wind that may be installed for use by loads
residing within the Balancing Authority.
For resources exported out of the Balancing Authority, Western will
charge the load-based rate against the nameplate of the resource plus a
Regulating Reserve Charge, measured by the average hourly mismatch of
the forecast versus the actual generation, and using pass-through
pricing.
G. Comment: Western has effectively double-charged customers for
energy associated with Regulation Service, by charging them once in
their Energy Imbalance Service rate schedule and by charging them again
within the Regulation Service rate as a Regulating Reserve Charge.
Response: In the interest of clarification, Western notes that its
Energy Imbalance Service credits customers who over-deliver their
resources and charges customers who under-deliver their resources.
Western will not double-collect by charging for both Energy
Imbalance Service and Regulating Reserve charges. The proposed
Regulating Reserve Charge is a separate and distinct charge and can be
viewed in the same light as a ``unit commitment'' charge; i.e., what
Western needs to keep on-line when an intermittent resource's actual
output differs from its scheduled output.
Western notes that the Regulating Reserve Charge would only apply
to entities exporting their intermittent generation out of WACM.
H. Comment: A comment states that Western's metric does not work
above the 10-percent penetration rate (as defined by Western). For wind
capacity in excess of this limit, there is no indication of what metric
will be used to calculate the impact of wind on the system regulation
requirements.
[[Page 28690]]
Response: Western has eliminated the limit for intermittent
generation of 180 MW or 10 percent of the Balancing Authority's
auxiliary load, primarily due to the dynamic circumstances surrounding
the impacts of additional intermittent resource installation. It is
highly likely that WACM would experience degradation in its CPS2 should
a single 200-MW intermittent resource be added to the Balancing
Authority's resource mix. Historically, however, WACM has seen a very
gradual addition of wind generators and has been able to adapt its
system to operate around the volatility of these generators. Therefore,
Western has eliminated the limit in the provisional rate.
2. Rate Implementation
A. Comment: Western has incorrectly identified non-conforming loads
and did not adequately define how they would be measured.
Response: Western's proposed metric for identifying conforming
versus non-conforming load was accurate, and properly distinguished
between these two types of loads. However, the WACM Balancing Authority
does not presently have any non-conforming load within its boundaries,
and is not anticipating such load in the foreseeable future. This led
to a decision to eliminate the non-conforming load assessment from the
provisional rate.
B. Comment: An SBA with AGC must respond to an error signal from
WACM ``proportional to the SBA's load within the Balancing Authority,''
which would be inequitable, as allocation of regulating burden cannot
be assessed on load. Regulating Service charges are more properly based
on the volatility of the load, not on average demand.
Response: The option of responding to a proportional share of
WACM's dynamic signal was one of several options available to
customers. However, this option was eliminated from the provisional
rate. Other remaining alternatives include paying the same load-based
Regulation Service rate as others or being treated as an SBA without
AGC, both of which would resolve the comment's concern that it only
respond to the ``volatility'' of its own load (see Response to Comment
2.C. below).
Regarding the comment that a proportional response of a customer's
AGC to an error signal from the Balancing Authority is inequitable,
Western believes that this arrangement is equitable and necessary to
prevent WACM from being the first to respond to a dynamic signal when
an SBA cannot. It ensures that the SBA absorbs, on a proportional
basis, responsibility for Regulation Service within the Balancing
Authority.
C. Comment: Under the self-provision assessment methodology, the
limits of 0.5 percent and 1.5 percent to determine whether there are
full, partial or no charges for a period are completely arbitrary.
Response: The bandwidths of 0.5 percent and 1.5 percent are not
arbitrary and follow calculations used by NERC for computing allowable
excursions for each Balancing Authority. This calculation is based on
the proportional share of generation response within a Balancing
Authority's boundaries, contrasted to total generation response in the
Interconnection.
D. Comment: A commenter maintains that it is providing its own
Regulation Service, and, therefore, is not subject to WACM's ancillary
service rate for Regulation Service.
Response: Western's position is that all entities operating within
the Balancing Authority that are not NERC-recognized balancing
authorities must take Regulation Service from the host Balancing
Authority, unless they can demonstrate that they are actually providing
their own service or are not using the resources of the host Balancing
Authority.
An entity's claim of full self-provision of Regulation Service must
be demonstrated through joint study between the entity and the
Balancing Authority, and approved by WACM. Until such time as full
self-provision is demonstrated and approved, the entity will be charged
for Regulation Service based on the entity's choice of: (1) The first
derivative of the averaged 1-minute change in the entity's ACE; (2) the
entity's average 1-minute ACE, as outlined in Rate Schedule L-AS3,
Section 3.1; or (3) the load-based rate applied against the entity's
load.
E. Comment: The rate methodology does not credit the SBA for
providing frequency response service which could motivate the SBA to
set its Frequency Bias to zero, resulting in governor response being
withdrawn by the AGC system during a system disturbance.
Response: For those entities operating generation in a tie-line
bias mode, Western will offset the calculated Regulation Service
requirement by mutual agreement with the SBA.
Western will not provide credit for the governor response, as it is
an involuntary action by the generating units across the Western
Interconnection to arrest frequency from further degradation in the
aftermath of a large contingency.
3. Miscellaneous
A. Comment: Several comments applauded Western for its efforts to
develop a rate for Regulation Service that recognizes the costs
associated with providing the service and attempts to allocate those
costs to the transmission customers responsible for incurring those
costs.
Response: Western notes the comments.
B. Comment: A comment recommends WACM abandon the present proposal
and develop a Regulation Service rate that uses technically defensible
metrics to measure consumption of the service.
Response: Western acknowledges the recommendation, but believes
that its methodology is technically defensible, and it would not be
reasonable to abandon efforts to manage and accurately account for the
cost of providing Regulation Service. Western provided appropriate time
and opportunity for consultation and comment on the proposed action in
accordance with the Procedures for Public Participation in Power and
Transmission Rate Adjustments and Extensions, set out in 10 CFR part
903.
C. Comment: A comment renewed an offer to help Western develop an
appropriate
Regulation Service tariff and help analyze the impact of wind
generation.
Response: Western appreciates the offers of assistance it received
during the course of this rate process, however, Western cannot give
favored status to any group or groups in the design and implementation
of proposed actions.
Western did accept information and input from all concerned
parties, both formally and informally, worked closely with technical
staff from other agencies, and hosted panel discussions regarding the
proposed rate at many wind-related conferences and meetings.
Western also believes that it is in the best position to design its
Regulation Service rate, based on the unique characteristics of WACM,
the regional Federal hydroelectric powerplants, and Western's mission.
Availability of Information
Information about this rate adjustment, including comments,
letters, memorandums and other supporting materials Western used to
develop the provisional rates, is available for public review in the
Rocky Mountain Customer Service Region, Western Area Power
Administration, 5555 East Crossroads Boulevard, Loveland, Colorado.
[[Page 28691]]
Regulatory Procedure Requirements
Regulatory Flexibility Analysis
The Regulatory Flexibility Act of 1980 (5 U.S.C. 601, et seq.)
requires Federal agencies to perform a regulatory flexibility analysis
if a final rule is likely to have a significant economic impact on a
substantial number of small entities and there is a legal requirement
to issue a general notice of proposed rulemaking. Western has
determined that this action does not require a regulatory flexibility
analysis since it is a rulemaking of particular applicability involving
rates or services applicable to public property.
Environmental Compliance
In compliance with the National Environmental Policy Act (NEPA) of
1969 (42 U.S.C. 4321, et seq.); Council on Environmental Quality
Regulations (40 CFR parts 1500-1508); and DOE NEPA Regulations (10 CFR
part 1021), Western has determined that this action is categorically
excluded from preparation of an environmental assessment or an
environmental impact statement.
Determination Under Executive Order 12866
Western has an exemption from centralized regulatory review under
Executive Order 12866; accordingly, no clearance of this notice by the
Office of Management and Budget is required.
Small Business Regulatory Enforcement Fairness Act
Western has determined that this rule is exempt from congressional
notification requirements under 5 U.S.C. 801 because the action is a
rulemaking of particular applicability relating to rates or services
and involves matters of procedure.
Submission to the Federal Energy Regulatory Commission
The provisional rates herein confirmed, approved, and placed into
effect, together with supporting documents, will be submitted to the
Commission for confirmation and final approval.
Order
In view of the foregoing and under the authority delegated to me, I
confirm and approve on an interim basis, effective June 1, 2006, Rate
Schedule L-AS3 for the Loveland Area Projects and the Western Area
Colorado Missouri Balancing Authority of the Western Area Power
Administration. The rate schedule shall remain in effect on an interim
basis, pending the Commission's confirmation and approval of it or a
substitute rate on a final basis through May 31, 2011.
Dated: May 9, 2006.
Clay Sell,
Deputy Secretary.
Rate Schedule L-AS3, Schedule 3 to Tariff, June 1, 2006
Rocky Mountain Region; Regulation And Frequency Response Service
Effective
The first day of the first full billing period beginning on or
after June 1, 2006, through May 31, 2011.
Applicable
Regulation and Frequency Response Service (Regulation Service) is
necessary to provide for the continuous balancing of resources,
generation and interchange with load, and for maintaining scheduled
interconnection frequency at sixty cycles per second (60 Hz).
Regulation Service is accomplished by committing online generation
whose output is raised or lowered, predominantly through the use of
automatic generating control equipment, as necessary to follow the
moment-by-moment changes in load. The obligation to maintain this
balance between resources and load lies with the Western Area Colorado
Missouri (WACM) Balancing Authority operator. The Customers (Loveland
Area Projects (LAP) Transmission Customers and customers on others'
transmission systems within WACM) must purchase this service from WACM
or make alternative comparable arrangements to satisfy their Regulation
Service obligations. The charges for Regulation Service are outlined
below.
LAP charges for Regulation Service may be modified upon written
notice to Customers. Any change to the Regulation Service charges will
be listed in a revision to this rate schedule issued under applicable
Federal laws, regulations, and policies and made part of the applicable
service agreement. Western will charge Customers under the rate then in
effect.
Types
There will be three different applications of this rate, none of
which are exclusive of the other, and all three may be applied to the
same entity where appropriate. The three applications are:
1. Load-based Assessment: The Rate is reflected in the Formula Rate
section and will be applied to entities who serve load within the WACM
Balancing Authority. This load-based rate will be assessed on an
entity's auxiliary load (total metered load less Federal entitlements)
and will also be applied to the installed nameplate capacity of all
intermittent generators within WACM.
2. Exporting Intermittent Resource Assessment: This application
will apply to entities that export the output from intermittent
resource(s). The entity will continue to pay the load-based charge on
the nameplate capacity, as described in No. 1 above, but will also pay
an additional Regulating Reserve charge for mismatched capacity; i.e.,
the hourly average mismatch of the resource's forecast versus actual
generation, using the regional market rate for capacity/reserves as
pricing.
3 Self-Provision Assessment: Western will allow entities with
automatic or manual generation control to self-provide for all or a
portion of their loads. Typically, entities with generation control are
known as Sub-Balancing Authorities (SBA) and should meet all of the
following criteria:
a. Have a well-defined boundary, with WACM-approved revenue-quality
metering, accurate as defined by NERC, to include MW flow data
availability at 6-second or smaller intervals.
b. Have AGC capability.
c. Demonstrate Regulation Service capability.
d. Execute a contract with the WACM Balancing Authority to:
i. Provide all requested data to the WACM Balancing Authority.
ii. Meet SBA Error Criteria as described under section 3.1 below.
3.1. Self-provision will be measured by use of the entity's 1-
minute average ACE or the entity's 1-minute first derivative of ACE (at
the customer's choice), to determine the amount of self-provision. The
assessment will be calculated every hour and the value of ACE or its
derivative will be used to calculate the Regulation Service charges as
follows:
a. If the entity's 1-minute average ACE or entity's 1-minute first
derivative of ACE is < = than 0.5 percent of the entity's hourly average
load, no Regulation Service charges will be assessed by WACM.
b. If the entity's 1-minute average ACE or the entity's 1-minute
first derivative of ACE is >= 1.5 percent of the entity's hourly
average load, WACM will assess Regulation Service charges to the
entity's entire load, using the load-based rate.
c. If the entity's 1-minute average ACE or the entity's 1-minute
first derivative of ACE is > 0.5 percent of the entity's hourly average
load, but < 1.5 percent of the entity's hourly average load, WACM will
assess Regulation Service
[[Page 28692]]
charges based on linear interpolation of zero charge and full charge.
Customer Accommodation
For entities unwilling to take Regulation Service, self-provide it
as described above, or acquire the service from a third party, Western
will assist the entity in dynamically metering its loads/resources to
another Balancing Authority. Until such time as that meter
configuration is accomplished, the entity will be responsible for
charges assessed by WACM under the rate in effect.
Formula Rate
Load-Based Rate, applicable to No. 1 and No. 3 as described above
and outlined in the ``Types'' section of this rate schedule:
[GRAPHIC] [TIFF OMITTED] TN17MY06.000
Pass-Through Costs (Market), will be applicable only to No. 2 as
described above and outlined in the ``Types'' section of this rate
schedule.
Rates
Load-Based Rate
The rate to be in effect June 1, 2006, through September 30, 2006,
for Nos. 1, 2, and 3, as described above and outlined in the ``Types''
section of this rate schedule is:
Monthly: $0.219/kW-month
Weekly: $0.051/kW-week
Daily: $0.007/kW-day
Hourly: $0.000292/kWh
This rate is based on the above formula and on fiscal year 2004
financial and load data, and will be adjusted annually as new data
become available.
Pass-Through Rate
The rate to be in effect June 1, 2006, through September 30, 2006,
for No. 2 as described above and outlined in the ``Types'' section of
this rate schedule will be the regional market-based cost for capacity/
reserves.
[FR Doc. E6-7494 Filed 5-16-06; 8:45 am]
BILLING CODE 6450-01-P